Great news for employers and employees alike: the IRS has raised the monthly commuter benefit limit to $340 for 2026, up from $325 in 2025. This increase reflects ongoing adjustments for inflation and rising transportation costs, providing both immediate tax savings and enhanced support for sustainable commuting.

What This Means for Employees

The increased limit gives employees more purchasing power for their daily commute while maximizing tax savings. By using pre-tax dollars for transit and parking expenses through IRS Code Section 132(f), employees can:

• Set aside up to $340 per month for transit expenses (buses, trains, metro, vanpools)
• Allocate up to $340 per month for qualified parking
• Reduce taxable income, resulting in more take-home pay each month
• Access a wider range of mobility options with the increased budget

Whether you're taking public transit, vanpooling with colleagues, or using micromobility options for first-and-last-mile connections, this increase helps make sustainable commuting more financially accessible.

Benefits for Employers

For HR leaders, benefits administrators, and finance teams, the commuter benefit limit increase represents an opportunity to enhance your benefits package while reducing costs:

• Lower payroll tax liability: When employees reduce their taxable income through pre-tax deductions, employers save an average of 7.65% on payroll taxes per participating employee
• Meet compliance requirements: Stay aligned with commuter benefit mandates in NYC, LA, Chicago, Philadelphia, the Bay Area, Seattle, DC, and other major metros
• Support return-to-office initiatives: Make commuting more affordable and appealing as teams transition back to the workplace
• Advance sustainability goals: Encourage greener commute choices and reduce your organization's Scope 3 carbon emissions
• Boost employee satisfaction: Demonstrate your commitment to employee wellbeing through meaningful financial benefits

Staying Compliant in 2026

If your organization operates in a city or state with a commuter benefits mandate, ensuring compliance with the new $340 limit is essential. Jurisdictions with active mandates include:

• New York City (20+ employees)
• Los Angeles (50+ employees)
• Philadelphia (50+ employees)
• San Francisco Bay Area (50+ employees)
• Seattle (20+ employees)
• Washington, DC (20+ employees)
• Chicago (50+ employees)
• New Jersey (20+ employees)

Non-compliance can result in significant penalties, with fines ranging from hundreds to thousands of dollars per violation. Staying ahead of these requirements protects your organization from unnecessary financial and legal risk.

Fleet Makes the Transition Seamless

If you're already working with Fleet, you're all set. Our platform will automatically update to the new $340 limit in January 2026, ensuring your program remains compliant without any additional work on your end. We'll also provide ready-to-use employee communications to help your team understand and take advantage of the increased benefit.

Not yet using Fleet? Our commuter benefits platform offers:

• Automated compliance: We handle limit updates and regulatory changes automatically
• Universal mobility support: Transit, parking, bikes, e-bikes, scooters, rideshare, and vanpools—all in one platform
• Data-driven insights: Understand how your employees commute, and opportunities to optimize your commute programs
• 225+ HRIS integrations: Seamless connection with your existing systems
• Pre-tax AND post-tax options: Unlike most providers, Fleet supports both benefit types in a single platform
• Sustainability tracking: Measure carbon impact with Fleet's Green Score and integrate with LEED Arc and other reporting tools

Looking Ahead to 2026

The increase to $340 per month acknowledges that commuting costs continue to rise, and both employees and employers benefit when sustainable transportation is financially supported. As hybrid work models stabilize and return-to-office plans take shape, robust commuter benefits are more important than ever for attracting talent, maintaining morale, and meeting your organization's environmental commitments.

Whether you're just starting a commuter benefits program or looking to optimize your existing offering, Fleet is here to help you navigate the transition smoothly and maximize the value for your entire organization.

Ready to simplify your commuter benefits program? Schedule a demo to see how Fleet can help your organization save money, meet compliance requirements, and support sustainable commuting in 2026 and beyond.

Have questions about compliance in your region? Check out our comprehensive compliance guides or contact our team for personalized support.